New DOL Rule and OFLA Employee Notice

Updated March 11, 2024

Increase to Salary Minimum for Exempt Employees

In August 2023, the U.S. Department of Labor (“DOL”) proposed a significant increase to the minimum salary requirement for executive, administrative, and professional (“EAP”) employees to be exempt from overtime pay requirements. After a long process that resulted in some changes, the rule has been finalized. Its key aspects are:

  • Effective July 1, 2024, the minimum salary for exempt EAP employees increases from $684 per week ($35,568 per year) to $844 per week ($43,888 per year).
  • On January 1, 2025, the minimum salary for those employees increases to $1,128 per week ($58,656 per year).
  • For the federal highly compensated employee (“HCE”) exemption, the minimum salary increases from $107,432 to $132,964 on July 1, 2024, and to $151,164 on January 1, 2025. NOTE: Oregon law does not recognize an HCE exemption. Therefore, Oregon employers must ensure their exempt employees satisfy the duties for an applicable exemption.
  • Beginning July 1, 2027, the minimum salary amount automatically updates every 3 years.
  • The rule does not change the “duties” tests for the EAP exemptions.

This isn’t the first time the DOL has finalized such a rule, and as some of us might remember, that doesn’t necessarily mean it will be implemented as planned. For example, in 2016, shortly before a similar increase was set to take effect, a court granted a challenger’s request to stay the implementation of the rule and, due to the change in presidential administrations, it never came into effect. There are rumors of similar challenges this time around, but it’s unclear if or when those challenges might happen and, of course, equally unclear whether they would succeed.

Considering those uncertainties, employers should assume a July 1, 2024 effective date and plan accordingly:

  • Review the EAP exempt employees in your organization and identify those who will not meet the minimum salary requirements on July 1 and January 1.
  • For those employees who will not meet the threshold, decide whether to increase their salary or convert them to hourly, non-exempt employees, taking into account economic and morale considerations.
  • If salary increases are an option, consider the broader implications under Oregon’s Equal Pay Act for employees doing comparable work.
  • If morale or other concerns make you reluctant to convert salaried employees to hourly employees, keep in mind that there’s no requirement that nonexempt employees are paid by the hour. But nonexempt employees who are paid a salary need to track their hours and must receive overtime pay for work beyond 40 hours in a workweek. Such an approach needs to be carefully considered and reclassified employees and their supervisors will need to be trained to ensure compliance with the overtime rules.
  • Decide when changes will be implemented, keeping in mind that successful legal challenges can happen shortly before the July 1 effective date.

Required Notice to Employees Regarding OFLA

As we previously reported, earlier this year the Oregon legislature passed a law that dramatically changed the types of leave that are covered by the Oregon Family Leave Act (“OFLA”). Effective July 1, 2024, OFLA will no longer cover leave due to the serious health condition of employees and their family members or parental leave. Instead, employees will need to apply for leave under Paid Leave Oregon (“PLO”) to protect those types of absences.

If as of June 30, 2024, you will have employees on OFLA leave for reasons that will no longer be covered under OFLA, then by June 1, 2024, you will need to notify those employees that their leave will not be protected as of July 1, 2024. You must also provide those employees with information about PLO, including information about how to apply for benefits and contact information for the Oregon Employment Department or your equivalent plan. Going forward, you are required to provide that same information to any employee who reports information that, prior to July 1, 2024, would have been sufficient for you to provisionally designate their leave as protected under OFLA.

For more information, please contact our attorneys, Amanda Walkup, Mario Conte, and Elizabeth Stubbs. This summary provides general information and should not be construed as legal advice or a legal opinion on any specific facts or circumstances.  If you have specific legal questions, you are urged to consult with your attorney concerning your own situation.